Shock and awe e-discovery: combatting asymmetrical costs

Slipping into a pattern of settling nonmeritorious claims is a soul-trapping experience for many general counsels. With e-discovery costs only making the problem worse, Edgar Allen Poe’s The Raven may ring in an in-house attorney’s ear, withplaintiffs “gently rapping, rapping at my chamber door.” But before burgeoning e-discovery costs cause you to say “nevermore” when contesting a claim, ponder these paths to e-discovery cost-shifting.

Look Beyond Zubulake

Cost-shifting under the “gold-standard” Zubulake case is particularly hostile to large corporations, especially when a plaintiff is seeking volumes of discovery (particularly internal communications) from a large organization. Under Zubulake, a responding party must first establish that the information is “not reasonably accessible” (e.g., the data is on backup tapes, is in a customized database or is erased, fragmented or damaged). Once this showing is made, a court will weigh the seven Zubulake factors to analyze whether cost-shifting is appropriate. At least three of the most important factors are arguably pro-plaintiff:

1. “The availability of information from other sources.” In the common scenario where a plaintiff is seeking communications about something – for example, contract negotiations, termination policies or patterns of conduct – these communications will almost always reside on a central e-mail or messaging system and are seldom available elsewhere.

2. “The total cost of production, compared to the resources available to each party.” The bigger you are the harder you fall; this factor is almost always going to disfavor a large corporate entity.

3. “The extent to which the request is specifically tailored to discover relevant information.” The problem, as corporations are becoming acutely aware of, is that even arguably reasonable requests for information mask immense amounts of different forms of electronic communication—e-mails, memos, instant messages, text messages, etc.—which can be exceedingly burdensome to manage.

Even though these Zubulake factors are arguably pro-plaintiff, this traditional cost-shifting argument is definitely worth pursuing, but it is not a certain win. Many litigants ask: are there any other avenues of relief?

Utilize Federal Rule of Civil Procedure 26(b)(2)(C)

Federal Rule of Civil Procedure (FRCP) 26(b)(2)(C) requires a court to limit discovery where the “burden or expense of the proposed discovery outweighs its likely benefit.” It is plausible that requests for information which may be viewed as reasonably accessible under Zubulake and FRCP 26(b)(2)(B) may still be disproportionate under FRCP 26(b)(2)(C)proportionality rule.

Be Creative (and add Vaughn v. LA Fitness to your arsenal)

In Vaughn, a putative contract dispute class action, the Eastern District of Pennsylvania considered shifting e-discovery costs prior to ruling on class certification. The court identified several unique aspects of the case. First, it was a case of “asymmetrical” discovery, costs would skyrocket if certification was granted and the defendants had already complied with extensive discovery. Additionally, the court noted that discovery was not being conducted solely on the merits of the case, but rather to determine whether certification was appropriate. The court reasoned that if the plaintiffs’ counsel had confidence in certification, “they should have no objection to making an investment.” The court concluded that “where (1) class certification is pending, and (2) the plaintiffs have asked for very extensive discovery, compliance with which will be very expensive, that absent compelling equitable circumstances to the contrary, the plaintiffs should pay for the discovery they seek.” Although the court limited its holding to class actions, the underlying principle is more broadly applicable—“Discovery need not be perfect, but discovery must be fair.” Ultimately, the court shifted all costs despite the fact that the responding party was a large company.

Collaborate with the Opposition to Leverage a Joint Discovery Platform

E-discovery technology can provide solutions to the “big data” problem. For example, plaintiffs and defendants or multiple defendants in a joint defense group can save costs by leveraging a single, multiparty discovery platform. Centralized discovery databases, hosted in the cloud and built with strong security protocols to keep data segregated across parties, are effective tools to curb production costs. Before concluding that plaintiffs have no incentive to agree to some form of e-discovery platform cost- sharing, consider that they too are mindful of e-discovery costs—reviewing disorganized productions is costly. At the very least, cooperation and cost agreements decrease time and expenses funneled into discovery motion practice.

Consider Taxation of Costs under 28 U.S.C. § 1920(4)

28 U.S.C. § 1920(4) enables parties to recoup certain discovery costs after the case is over. The statute provides for the necessary “costs of making copies of any materials.” In the wake of the Race Tires case, courts may be less inclined to grant taxation of general e-discovery costs (e.g., creating an e-discovery database); however, anytime you are engaged in creating electronic copies (e.g. reproducing or converting files) not for your own convenience, the resulting costs may be taxable (and are definitely worth documenting).

When e-discovery costs seem overwhelming, remember, e-discovery cost allocation is in its infancy. With a significant divergence in the courts, it is up to you to set the pace for the next watershed e-discovery decision.